Economic outlook

The Economic Outlook series provides monthly updates on the outlook for the global and US economies, and quarterly updates for China and Canada.

2018

Apr

US Economic Outlook

Although growth in 1Q18 appears to have decelerated slightly from the pace seen in the prior three quarters, we expect this slowdown to be temporary. Our forecast for a 2.9% advance for the whole year is unchanged. The Federal Reserve noted in their March statement that the outlook for the economy has strengthened compared to their January projections, and raised the target rate to 1.5-1.75%. We expect the Fed to continue removing monetary stimulus with three more hikes this year. Trade policy presents downside risks to our baseline scenario, in particular with the US-China tariff spat escalating of late.

Global Economic Outlook

We expect a continuation of strong global economic growth. Macroeconomic risks remain broadly balanced. Inflation and sovereign bond yields are expected to increase moderately over the next two years. Long-term bond yields are expected to rise only moderately – unchanged from last month. Trade tensions will likely persist with further escalation a key risk to the outlook.

Mar

Canada Economic Outlook

Following a stellar 3.0% advance in real GDP in 2017, economic growth is projected to be a much more modest 2.0% this year, albeit still at or slightly above potential. The economy appears to be at or near capacity. In particular year-end capacity utilization of 86.0% across all industries was the highest reading since 1Q06, and the 86.1% in manufacturing the highest since 4Q00. Meanwhile, although employment growth has cooled, wage and inflation trends are firming. Since overall growth has already slowed, the Bank of Canada's (BoC) is likely to be relatively cautious with further action, with the next rate hike expected in July.

Global Economic Outlook and Scenarios 2018

Global Economic Outlook and Scenarios

We expect a continuation of strong global economic growth. Macroeconomic risks remain broadly balanced – even after upward revisions to our baseline scenario over recent months. Inflation and sovereign bond yields are expected to increase moderately over the next two years.

Feb

China Economic Outlook Quarterly

China's 2017 annual GDP growth rebounded by 0.2 percentage point to 6.9%, slightly higher than our expectation of 6.8%. This is the first acceleration in growth since 2010, and is higher than the government's target of 6.5%. The solid performance was mainly driven by strong exports, as well as sanguine domestic consumption and services demand.